Scope of Activities of an NBFC - Peer to Peer Lending

Scope of Activities of an NBFC – P2P

1. An NBFC – P2P shall–

act as an intermediary providing an online marketplace or platform to the participants involved in Peer to Peer lending;
not raise deposits as defined by or under Section 45I (bb) of the Act or the Companies Act, 2013;
not lend on its own;
not provide or arrange any credit enhancement or credit guarantee;
not facilitate or permit any secured lending linked to its platform; i.e. only clean loans will be permitted;
not hold, on its own balance sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans; or such funds as stipulated in paragraph 9;
not cross sell any product except for loan specific insurance products;
not permit international flow of funds;
ensure adherence to legal requirements applicable to the participants as prescribed under relevant laws.
store and process all data relating to its activities and participants on hardware located within India.

2. Further, NBFC- P2P shall –

undertake due diligence on the participants;
undertake credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders;
require prior and explicit consent of the participant to access its credit information;
undertake documentation of loan agreements and other related documents;
provide assistance in disbursement and repayments of loan amount;
render services for recovery of loans originated on the platform.

3. NBFC – P2P shall not undertake any activity other than those stated in paras 6(1) and 6(2) of these Directions. Deployment of investible funds by an NBFC-P2P in instruments specified by the Bank, not for trading, shall however be permitted.

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